Below is a production possibilities curve for a large tract of prairie farm land.

-Refer to the graph above to answer this question.If 150 units of rye are currently being produced,what is the cost of producing 50 more units of rye?
A)25 units of wheat.
B)50 units of wheat.
C)100 units of wheat.
D)400 units of wheat.
E)Cannot be determined.

Question

Below is a production possibilities curve for a large tract of prairie farm land.
 
-Refer to the graph above to answer this question.If 150 units of rye are currently being produced,what is the cost of producing 50 more units of rye?
A)25 units of wheat. 
B)50 units of wheat. 
C)100 units of wheat. 
D)400 units of wheat. 
E)Cannot be determined.

Quizplus · Accepted Answer

To produce 50 more units of rye, the economy would have to move from point A to point B on the curve. The opportunity cost of producing 50 more units of rye is the amount of wheat that this shift in production requires. From the graph, we can see that the slope of the production possibilities curve, which represents the opportunity cost of producing one good in terms of the other, becomes steeper as we move down and to the right along the curve. Therefore, the cost of producing an additional 50 units of rye will be greater than the cost of producing the first 150 units of rye. From point A to point B, we need to give up the production of 100 units of wheat. Therefore, the cost of producing 50 more units of rye is 100 units of wheat. The answer is (C).

Below Is a Production Possibilities Curve for a Large Tract